GAIN 10-K & 10-Q changes, risk factors and insider trading

•the national and global political environment, including government shutdowns, war, armed conflicts, foreign relations and trading policies;

Given the volatility and dislocation that the capital markets have experienced from time to time, many BDCs have faced, and may in the future face, a challenging environment in which to raise capital. We may in the future have difficulty accessing debt and equity capital, and a severe disruption in U.S. or global financial markets or deterioration in credit and financing conditions could have a material adverse effect on our business, financial condition, results of operations, and cash flows. In addition, significant changes in the capital markets have had, and may in the future have, a negative effect on the valuations of our investments and on the potential for liquidity events involving our investments. An inability to raise capital, and any required sale of our investments for liquidity purposes,purposes or failure of our portfolio companies to realize liquidity events, could have a material adverse impact on our business, financial condition, results of operations, or cash flows.

Existing or new tariffs imposed on foreign goods imported by the United States or on U.S. goods imported by foreign countries could subject us or our portfolio companies to additional risks. Among other effects, tariffs or threat of tariffs could increase the cost of production for certain of our portfolio companies or reduce demand for their products,products or create uncertainty about either of the foregoing, which could affect their results of operations. We cannot predict whether, or to what extent, any tariff or other trade protections may affect us or our portfolio companies.

Certain of our portfolio companies are in industries that have been and, in the future, may be impacted by inflation, such as consumer goods and services and manufacturing. Our portfolio companies may not be able to pass on to customers increases in their costs of operations which could greatly affect their operating results, impacting their ability to repay our loans. In addition, any projected future decreases in our portfolio companies’ operating results due to inflation could adversely impact the fair value of those investments. Any decreases in the fair value of our investments could result in future realized or unrealized losses and therefore reduce our net assets resulting from operations.

One of the factors that influences the price of our securities is the distribution yield on our securities (as a percentage of the price of our securities) relative to market interest rates. An increase in market interest rates may lead prospective purchasers of our securities to expect a higher distribution yield. In addition, higher interest rates have increasedincrease our borrowing costs. As a result, higher market interest rates could to cause the market price of our securities to decrease.

Generally, interest rate fluctuations and changes in credit spreads on floating rate loans may have a negative impact on our investments and investment opportunities and, accordingly, may have a material adverse effect on our rate of return on invested capital, our net investment income, our NAV and the market price of our securities. As interest rates increase, generally, the cost of borrowing under our Credit Facility increases, which may affect our ability to make new investments on favorable terms or at all. AAs substantialof portionMarch 31, 2026, all of our debt investments have variable interest rates that reset periodically and are generally based on SOFR. If interest rates increase, the operating performance of certain of our portfolio companies may be affected by increasing debt service obligations and, therefore, may affect our results of operations. In addition, to the extent that increases in interest rates make it difficult or impossible to make payments on outstanding indebtedness to us or other financial sponsors or refinance debt that is maturing in the near term, some of our portfolio companies may be unable to repay such debt at maturity and may be forced to sell assets, undergo a recapitalization or seek bankruptcy protection. Elevated interest rates could also cause borrowers to shift cash from other productive uses to the payment of interest, which may have a material adverse effect on their business and operations and could, over time, lead to increased defaults. Additionally, as interest rates increase and the corresponding risk of a default by borrowers increases, the liquidity of higher interest rate loans may decrease as fewer investors may be willing to purchase such loans in the secondary market in light of the increased risk of a default by the borrower and the heightened risk of a loss of an investment in such loans. Decreases in credit spreads on debt that pays a floating rate of return would have an impact on the income generation of our floating rate assets. Trading prices for debt that pays a fixed rate of return tend to fall as interest rates rise. Trading prices tend to fluctuate more for fixed rate securities that have longer maturities. If interest rates remain elevated or rise again in the future, it could have a negative effect on our investments, which could negatively impact our operating results, financial condition, and cash flows.

Ultimately, we expect approximately 90% of the loans in our portfolio to be at variable rates determined on the basis of the SOFR and approximately up to 10% to be at fixed rates. As of March 31, 2025, based on the total principal balance of debt investments outstanding,2026, our portfolio consisted of 100.0% of loans at variable rates with floors.

•Lower Middle Market businesses may have limited financial resources and may not be able to repay the loans we make to them. Our strategy includes providing financing to portfolio companies that typically do not have readily available access to financing. While we believe that this provides an attractive opportunity for us to generate profits, this may make it difficult for the portfolio companies to repay their loans to us upon maturity. A borrower’s ability to repay its loan(s) may be adversely affected by numerous factors, including the failure to meet its business plan, a downturn in its industry or negative economic conditions. Deterioration in a borrower’s financial condition and prospects usually will be accompanied by deterioration in the value of any collateral and a reduction in the likelihood of realizing on any guaranties we may have obtained from the borrower’s management. As of March 31, 2025,2026, loans to fourthree portfolio companies were on non-accrual status with an aggregate debt cost basis of $90.2$40.3 million, or 13.1%5.4% of the cost basis of all debt investments in our portfolio. We cannot assure you that our efforts to improve profitability and cash flows of these companies will prove successful. In some of our loans we expect to be subordinated to a senior lender and our security interest in any collateral would, accordingly, likely be second lien and subordinate to another lender’s security interest.

•Lower Middle Market businesses may have limited operating histories. While we intend to continue to target stable companies with proven track records, we may invest in newnewly established companies that meet our other investment criteria. Portfolio companies with limited operating histories will be exposed to all of the operating risks that new businesses face and may be particularly susceptible to, among other risks, market downturns, competitive pressures and the departure of key executive officers.

Our NAV would be adversely affected if the fair value of our investments areis higher than the values that we ultimately realize upon the disposal of such securities.

We generally make investments in private companies whose securities are not traded in any public market. Substantially all of the investments we presently hold and the investments we expect to acquire in the future are, and will be, subject to legal and other restrictions on resale and will otherwise be less liquid than publicly-traded securities. The illiquidity of our investments may make it difficult for us to quickly obtain cash equal to the value at which we record our investments if the need arises. This could cause us to miss important investment opportunities.opportunities to the extent we do not have other sources of capital available. In addition, if we are required to liquidate all or a portion of our portfolio quickly, we may record substantial realized losses upon liquidation. We may also face other restrictions on our ability to liquidate an investment in a portfolio company to the extent that we, the Adviser, the Administrator, or our respective officers, or affiliates have material non-public information regarding such portfolio company.

As of March 31, 2025,2026, we had investments in 2529 portfolio companies, the five largest of which included SFEG, Ricardo,E3, Brunswick,Schylling, Nielsen-KellermanBrunswick and E3Detroit Defense and comprised $401.7$582.6 million, or 41.0%,44.5%, of our total investment portfolio, at fair value. A consequence of a limited number of investments is that the aggregate returns we realize may be substantially adversely affected by the unfavorable performance of a small number of such investments or a substantial write-down of any one investment. Beyond our regulatory and income tax diversification requirements, as well as Credit Facility requirements, we do not have fixed guidelines for industry concentration and our investments could potentially be concentrated in relatively few industries. In addition, while we do not intend to invest 25% or more of our total assets in a particular industry or group of industries at the time of investment, it is possible that as the values of our portfolio companies change, one industry or a group of industries may comprise in excess of 25% of the value of our total assets. A downturn in a particular industry in which we have invested a significant portion of our total assets could have a materially adverse effect on us. As of March 31, 2025,2026, our largest industry concentration was in Diversified/ConglomerateMachinery Services,(Non-Agriculture, Non-Construction, and Non-Electronic), representing 17.4%19.8% of our total investments, at fair value.

Our portfolio includes companies related to the oil and gas industry with the fair value of these investments representing approximately $69.6$125.6 million, or 7.1%9.6% of our total portfolio at fair value, as of March 31, 2025.2026. These businesses provide services to oil and gas companies and are indirectly impacted by the prices of, and demand for, oil and natural gas, which have from time to time experienced volatility, including recent rapid and significant changes in prices,prices resulting from geopolitical conflict in the Middle East, and such volatility could continue or increase in the future. A substantial decline in oil and natural gas demand or prices may adversely affect the business, financial condition, cash flows, liquidity or results of operations of these portfolio companies and might impair their ability to meet capital expenditure obligations and financial commitments. Any decline in oil prices, especially for a prolonged period, could therefore have a material adverse effect on our business, financial condition and results of operations.

Since we generally make five year term loans and hold our loans and equity positions until the loans mature and/or we exit the investment, investors should not expect realization events, if any, to occur over the near term.term following the making of a new investment. In addition, we expect that any equity investments may require several years to appreciate in value and we cannot give any assurance that such appreciation will occur or ultimately be realized.

We will have a continuing need for capital to finance our investments. As of March 31, 2025,2026, we, through our wholly-owned subsidiary, Business Investment, had no$23.9 borrowingsmillion outstanding under our Credit Facility, which provides for maximum borrowings of $270.0$300.0 million, with a revolving period end date of October 30, 2026 (the “Revolving Period End Date”). Our Credit Facility permits us to fund additional loans and investments as long as we are within the conditions and covenants set forth in the credit agreement. Among other things, our Credit Facility contains covenants that require Business Investment to maintain its status as a separate legal entity, prohibit certain significant corporate transactions (such as mergers, consolidations, liquidations or dissolutions) and restrict certain material changes to our credit and collection policy without the lenders’ consent. Our Credit Facility also generally seeks to restrict distributions to stockholders to the sum of (i) our net investment income, (ii) net capital gains, and (iii) amounts deemed by the Company to be considered as having been paid during the prior fiscal year in accordance with Section 855(a) of the Code. Loans eligible to be pledged as collateral are subject to certain limitations, including, among other things, restrictions on geographic concentrations, industry concentrations, loan size, payment frequency and status, average life, portfolio company leverage, and lien property. Our Credit Facility also requires Business Investment to comply with other financial and operational covenants, which obligate Business Investment to, among other things, maintain certain financial ratios, including asset and interest coverage and a minimum number of obligors in the borrowing base. Additionally, our Credit Facility contains a performance guarantee that requires the Company to maintain (i) a minimum net worth of the greater of $210.0 million or $210.0 million plus 50% of all equity and subordinated debt raised minus 50% of any equity or subordinated debt redeemed or retired after November 16, 2016, which equated to $412.9$476.6 million as of March 31, 20252026; (ii) asset coverage with respect to senior securities representing indebtedness of at least 150% (or such percentage as may be set forth in Section 18 of the 1940 Act, as modified by Section 61 of the 1940 Act); and (iii) our status as a BDC under the 1940 Act and as a RIC under the Code. As of March 31, 2025,2026, and as defined in the performance guaranty of our Credit Facility, we had a net worth of $953.3$1.2 million,billion, asset coverage on our senior securities representing indebtedness of 204.4%,213.8%, calculated in accordance with the requirements of Sections 18 and 61 of the 1940 Act, and an active status as a BDC and RIC. As of March 31, 2025,2026, we were in compliance with all covenants under our Credit Facility; however, our continued compliance depends on many factors, some of which are beyond our control.

If our Credit Facility is not renewed or extended by the Revolving Period End Date, all principal and interest will be due and payable on October 30, 2028 (two years after the Revolving Period End Date). Subject to certain terms and conditions, our Credit Facility may be expanded to a total of $300.0 million through additional commitments of existing or new lenders. However, if such lenders are unwilling to provide additional commitments under the terms of our Credit Facility, we will be unable to expand our Credit Facility and thus will continue to have limited availability to finance new investments under our Credit Facility. There can be no guaranty that we will be able to renew, extend or replace our Credit Facility upon its Revolving Period End Date on terms that are favorable to us, if at all. Our ability to expand our Credit Facility, and to obtain replacement financing at or before the time of its Revolving Period End Date, will be constrained by then current economic conditions affecting the credit markets. In the event that we are not able to expand our Credit Facility, or to renew, extend or refinance our Credit Facility by the Revolving Period End Date, this could have a material adverse effect on our liquidity and ability to fund new investments, our ability to make distributions to our stockholders and our ability to qualify as a RIC under the Code.

•Senior Securities: We have in the past, and may in the future issue "senior securities representing indebtedness" (including borrowings under our Credit Facility, our 5.00% 2026 Notes, our 4.875% 2028 Notes, our 8.00%6.875% 2028 Notes, our 7.875% 2030 Notes and our 7.875%7.125% 20302031 Notes) and "senior securities that are stock", up to the maximum amount permitted by the 1940 Act. The 1940 Act currently permits us, as a BDC, to issue senior securities representing indebtedness and senior securities which are stock, in amounts such that our asset coverage, as defined in Section 18(h) of the 1940 Act, is at least 150% on each such senior security immediately after each issuance of each such senior security. As a result of issuing senior securities (in whatever form), we will be exposed to the risks associated with leverage. Although borrowing money for investments increases the potential for gain, it also increases the risk of a loss. A decrease in the value of our investments will have a greater impact on the value of our common stock to the extent that we have borrowed money to make investments. There is a possibility that the costs of borrowing could exceed the income we receive on the investments we make with such borrowed funds. In addition, our ability to pay distributions, issue senior securities or repurchase shares of our common stock would be restricted if the asset coverage on each of our senior securities is not at least 150%. If the aggregate fair value of our assets declines, we might be unable to satisfy that 150% requirement. To satisfy the 150% asset coverage requirement in the event that we are seeking to pay a distribution, we might either have to (i) liquidate a portion of our loan portfolio to repay a portion of our indebtedness or (ii) issue common stock. This may occur at a time when a sale of a portfolio asset may be disadvantageous, or when we have limited access to capital markets on agreeable terms. In addition, any amounts that we use to service our indebtedness, pay dividends on our preferred stock or for offering costs will not be available for distributions to common stockholders. Pursuant to Section 61(a)(3) of the 1940 Act, we are permitted, under specified conditions, to issue multiple classes of "senior securities representing indebtednessindebtedness.". However, pursuant to Section 18(c) of the 1940 Act, we are permitted to issue only one class of "senior securities that are stockstock.".

•Common and Convertible Preferred Stock: Because we are constrained in our ability to issue debt or senior securities for the reasons given above, we may at times be dependent on the issuance of equity as a financing source. If we raise additional funds by issuing more common stock, the percentage ownership of our common stockholders at the time of the issuance would decrease and our existing common stockholders may experience dilution. In addition, under the 1940 Act, we will generally not be able to issue additional shares of our common stock at a price below NAV per common share to purchasers, other than to our existing common stockholders through a rights offering, without first obtaining the approval of our stockholders and our independent directors. If we were to sell shares of our common stock below our then current NAV per common share, such sales would result in an immediate dilution to the NAV per common share. This dilution would occur as a result of the sale of common shares at a price below the then current NAV per share of our common stock and a proportionately greater decrease in a common stockholder’s interest in our earnings and assets and voting percentage than the increase in our assets resulting from such issuance. For example, if we issue and sell an additional 10% of our common stock at a 5% discount from NAV, a common stockholder who does not participate in that offering for its proportionate interest will suffer NAV dilution of up to 0.5% or $5 per $1,000 of NAV. This imposes constraints on our ability to raise capital when our common stock is trading below NAV per common share, as it generally has for the last several years.share. As noted above, the 1940 Act prohibits the issuance of multiple classes of "senior securities that are stockstock.".

The use of leverage, including through the issuance of senior securities that are debt or stock, magnifies the potential for gain or loss on amounts invested and, if we incur additional leverage, this potential will be further magnified. We have incurred leverage in the past and currently incur leverage through the Credit Facility, the 5.00% 2026 Notes, the 4.875% 2028 Notes, the 8.00%6.875% 2028 Notes, 7.875% 2030 Notes and 7.875%7.125% 20302031 Notes and, from time to time, may incur additional leverage to the extent permitted under the 1940 Act. The use of leverage is generally considered a speculative investment technique and increases the risks associated with investing in our securities. In the future, we may borrow from, and issue senior securities to, banks and other lenders. Holders of these senior securities will have fixed dollar claims on our assets that are superior to the claims of our common stockholders, and we would expect such holders to seek recovery against our assets in the event of a default.

(A)The hypothetical return to common stockholders is calculated by multiplying our total assets as of March 31, 20252026 by the assumed rates of return and subtracting all interest on our debt expected to be paid during the twelve months following March 31, 2025,2026, and then dividing the resulting difference by our total net assets attributable to common stock as of March 31, 2025.2026. Based on $1.0$1.3 billion in total assets, no$23.9 million of borrowings outstanding on our Credit Facility, $127.9 million of 5.00% 2026 Notes, at cost, $134.6 million of 4.875% 2028 Notes, at cost, $74.8$60.0 million of 8.00%6.875% 2028 Notes, at cost, $126.5 million of 7.875% 2030 Notes, at cost, and $499.1$100.0 million of 7.125% 2031 Notes, at cost, and $668.2 million in net assets as of March 31, 2025.2026.

We are dependent upon our key management personnel and the key management personnel of the Adviser, particularly David GladstoneDullum, Erika Highland and DavidChristopher Dullum,Lee, and on the continued operations of the Adviser, for our future success.

We have no employees. Our chief executive officer, chief operating officer, chief financial officer and treasurer, chief valuation officer, chief investment officer and the officers and employees of the Adviser do not spend all of their time managing our activities and our investment portfolio. We are particularly dependent upon David GladstoneDullum and DavidErika DullumHighland for their experience, skills, and networks. Our executive officers and the employees of the Adviser allocate some, and in some cases a material portion, of their time to businesses and activities that are not related to our business. We have no separate facilities and are completely reliant on the Adviser, which has significant discretion as to the implementation and execution of our business strategies and risk management practices. We are subject to the risk of discontinuation of the Adviser’s operations or termination of the Advisory Agreement and the risk that, upon such event, no suitable replacement will be found. We believe that our success depends to a significant extent upon the Adviser and that discontinuation of its operations or the loss of its key management personnel could have a material adverse effect on our ability to achieve our investment objectives.

Our executive officers and directors, and the officers and directors of the Adviser, serve or may serve as officers, directors, or principals of entities that operate in the same or a related line of business as we do or of investment funds managed by our affiliates. Accordingly, they may have obligations to investors in those entities, the fulfillment of which might not be in our or our stockholders’ best interests. For example, Mr. Gladstone, our chairman and chief executive officer,chairman, is the chairman of the board of all of the Affiliated Public Funds, chairman of the board and chief executive officer of the Adviser, the Administrator, Gladstone Land and Gladstone Alternative, in addition to serving as the president of the Adviser and Administrator,Gladstone and the Affiliated Public Funds.Land. Mr. Dullum, our chief executive officer and president, is also an executive vice president of the Adviser. While portfolio managers and the officers and other employees of the Adviser devote as much time to the management of us as appropriate to enable the Adviser to perform its duties in accordance with the Advisory Agreement, the portfolio managers and other of the Adviser's officers may have conflicts in allocating their time and services among us, on the one hand, and other investment vehicles managed by the Adviser, on the other hand. These activities could be viewed as creating a conflict of interest insofar as the time and effort of the portfolio managers and the officers and employees of the Adviser will not be devoted exclusively to our business but will instead be allocated between our business and the management of these other investment vehicles. Moreover, the Adviser may establish or sponsor other investment vehicles which from time to time may have potentially overlapping investment objectives with ours and accordingly may invest in, whether principally or secondarily, asset classes we target. While the Adviser generally has broad authority to make investments on behalf of the investment vehicles that it advises, the Adviser has adopted investment allocation procedures to address these potential conflicts and intends to direct investment opportunities to the Company or the Affiliated Public FundFunds with the investment strategy that most closely fits the investment opportunity. Nevertheless, the management of the Adviser may face conflicts in the allocation of investment opportunities to other entities it manages. As a result, it is possible that we may not be given the opportunity to participate in certain investments made by other funds managed by the Adviser.

AtEach anyseries timeof withNotes respectis, or will in the future be, subject to theredemption 5.00%at 2026our Notesoption. and the 4.875% 2028 Notes, on or after August 1, 2025, with respect to the 8.00% 2028 Notes and on or after February 1, 2027, with respect to the 7.875% 2030 Notes, weWe may choose to redeem thesuch Notes from time to time, especially if prevailing interest rates are lower than the rate borne by the Notes. If prevailing rates are lower at the time of redemption, and we redeem the Notes, you likely would not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as the interest rate on the Notes being redeemed. Our redemption right also may adversely impact your ability to sell the Notes as the optional redemption date or period approaches.

The following analysis of our financial condition and results of operations should be read in conjunction with our accompanying Consolidated Financial Statements and the notes thereto contained elsewhere in this Annual Report. Historical financial condition and results of operations and percentage relationships among any amounts in the financial statements are not necessarily indicative of financial condition, results of operations or percentage relationships for any future periods. Except per share amounts, dollar amounts in tables included herein are in thousands unless otherwise indicated.

We focus on investing in Lower Middle Market businesses in the U.S. that meet certain criteria, including: the sustainability of the business’ free cash flow and its ability to grow it over time, adequate assets for loan collateral, experienced management teams with a significant ownership interest in the portfolio company, reasonable capitalization of the portfolio company, including an ample equity contribution or cushion based on prevailing enterprise valuation multiples, and the potential to realize appreciation and gain liquidity in our equity position, if any. We anticipate that liquidity in our equity position will be achieved through a mergermerger, acquisition or acquisitionrecapitalization of the portfolio company, a public offering of the portfolio company’s stockstock, or, to a lesser extent, by exercising our right to require the portfolio company to repurchase our warrants, though there can be no assurance that we will always have these rights. We invest in portfolio companies that seek funds for management buyouts and/or growth capital to finance acquisitions, recapitalize or, to a lesser extent, refinance their existing debt facilities. We seek to avoid investing in high-risk, early-stage enterprises. Our targeted portfolio companies are generally considered too small for the larger capital marketplace.

While the business environment remains competitive, we continue to see new investment opportunities consistent with our investment strategy of providing a combination of debt and equity in support of management and independent sponsor-led buyouts of Lower Middle Market companies in the U.S. During the year ended March 31, 2025,2026, we invested in four new portfolio companies and exited two portfolio companies. From our initial public offering in June 2005 through March 31, 2025,2026, we have invested in 6266 companies, excluding investments in syndicated loans, for a total of approximately $2.0$2.2 billion, before giving effect to principal repayments and divestitures.

From inception through March 31, 2025,2026, we exited our investments in 33 portfolio companies that we acquired under our buyout strategy. In the aggregate, these sales have generated $353.4$353.6 million in net realized gains and $45.4 million in other income upon exit, for a total increase to our net assets of $398.8$399.0 million. We believe, in aggregate, these transactions were equity-oriented investment successes and exemplify our investment strategy of striving to achieve returns through current income on the debt portion of our investments and capital gains from the equity portion. The 33 liquidity events have offset any realized losses since inception, which were primarily incurred during the 2008-2009 recession in connection with the sale of performing syndicated loans at a realized loss to pay off a former lender. The successful exits, in part, enabled us to increase the monthly distribution per common share by 100.0% from March 2011 through March 31, 20252026 and allowed us to declare and pay 2324 supplemental distributions to common stockholders through March 31, 2025.2026.

We have been able to meet our capital needs through extensions of and increases to the Credit Facility and by accessing the capital markets in the form of public offerings of unsecured notes, as well as common and preferred stock. We have successfully extended the Credit Facility’s revolving period multiple times, most recently to October 2026, and currently have a total commitment amount of $270.0$300.0 million. During the year ended March 31, 2026, we issued the 6.875% 2028 Notes for gross proceeds of $60.0 million, issued the 7.125% 2031 Notes for gross proceeds of $100.0 million (withand asold potential2,984,586 total commitmentshares of $300.0our millioncommon throughstock additionalunder commitmentsour from"at-the-market" newprogram or(the existing"2024 lendersCommon Stock ATM Program"). for gross proceeds of approximately $42.1 million. During the year ended March 31, 2025, we issued the 7.875% 2030 Notes for gross proceeds of $126.5 million and sold 148,714 shares of our common stock under our "at-the-market" program (the "2024 Common Stock ATM Program") for gross proceeds of approximately $2.0 million. During the year ended March 31, 2024, we issued the 8.00% 2028 Notes for gross proceeds of $74.8 million and sold 3,097,162 shares of our common stock under our previous "at-the-market" program (the "2022 Common Stock ATM Program") for gross proceeds of approximately $44.5 million. Refer to “Liquidity and Capital Resources.”

Although we have been able to access the capital markets historically, market conditions may continue to affect the trading price of our common stock and thus our ability to finance new investments through the issuance of common equity. On March 31, 2025,2026, the closing market price of our common stock was $13.36$14.20 per share, representing a 1.4%15.4% discount to our NAV of $13.55$16.78 per share as of March 31, 2025.2026. When our common stock trades below NAV, our ability to issue additional equity is constrained by provisions of the 1940 Act, which generally prohibits the issuance and sale of our common stock at an issuance price below the then current NAV per share without stockholder approval, other than through sales to our then existing stockholders pursuant to a rights offering.

•In NovemberMay 2024,2025, we invested $27.2$49.5 million in a new portfolio company, PyrotekSmart SpecialChemical Effects,Solutions, Inc.LLC ("PyrotekSmart Chemical"), in the form of $20.1$35.7 million of secured first lien debt and $7.1$13.8 million of preferred equity. Pyrotek,Smart Chemical, headquartered in Ontario,Midland, Canada,Texas, is a leading provider of specialproduction effectschemicals servicesfor onshore oil and solutionsgas foroperators throughout the liveUnited entertainment industry.States.

•In DecemberMay 2024,2025, we invested $78.7$12.8 million in a new portfolio company, RicardoSun Defense,State Inc.Nursery and Landscaping, LLC ("RicardoSun State"), in the form of $61.3$9.8 million of secured first lien debt and $17.4$3.1 million of preferred equity. Ricardo,Sun State, headquartered in Troy,Jacksonville, Michigan,Florida, withis operationsa commercial landscaping installation and maintenance provider in California,the TexasJacksonville and Alabama and overseas, develops engineering and product solutions for U.S. Army vehicle and logistics programs.area.

•In JanuaryJune 2025, we restructured our investment in PSI Molded Plastics, IncInc. ("PSI Molded"). As a result of the restructuring, we converted debt with a cost basis of $16.4$10.6 million into preferred equity.

Total investment income increased $6.4$5.4 million, or 7.3%,5.8%, for the year ended March 31, 2025,2026, as compared to the prior year. This increase was primarily due to an increase in interest income, partially offset by a decrease in dividend and success fee income and an increase in interest income.

The weighted-average principal balance of our interest-bearing investment portfolio during the year ended March 31, 20252026 was $601.5$671.6 million, compared to $560.8$601.5 million during the prior year. This increase was primarily due to the origination of $177.7$250.5 million of new debt investmentsinvestments, and $102.5$47.0 million of follow-on debt investments in existing portfolio companies,companies and $20.0 million of loans returned to accrual status, partially offset by the pay-off, restructuring, or write-off of $151.6$153.5 million of debt investments and $31.0$30.8 million of existing loans placed on non-accrual status after March 31, 2023,2024, and their respective impact on the weighted-average principal balance when considering the timing of new investments, pay-offs, restructurings, write-offs, and accrual status changes, as applicable. During the year ended March 31, 2026, we collected $1.8 million in past due interest from portfolio companies that were previously on non-accrual status, including $1.5 million from SFEG Holdings, Inc. ("SFEG") and $0.3 million from J.R. Hobbs. We had no collections of past due interest during the year ended March 31, 2025.

The weighted-average yield on our interest-bearing investments, excluding cash and cash equivalents and receipts recorded as dividend and success fee income, was 13.9%13.3% and 14.4%13.9% for the years ended March 31, 20252026 and 2024,2025, respectively. The weighted-average yield may vary from period to period, based on the current stated interest rate on interest-bearing investments, coupled with any collection of past due interest during the period. During the years ended March 31, 2025 and 2024, we had no collections of past due interest.

As of March 31, 2025,2026, our loans to B+T Group Acquisition, Inc. ("B+T"), Diligent Delivery Systems ("Diligent"), and Edge Adhesives Holdings, Inc. ("Edge"), and J.R. Hobbs Co. – Atlanta, LLC ("J.R. Hobbs") were on non-accrual status, with an aggregate debt cost basis of $90.2$40.3 million. As of March 31, 2024,2025, our loans to B+T, Diligent, Edge and J.R. Hobbs were on non-accrual status, with an aggregate debt cost basis of $59.1$90.2 million.

Dividend and success fee income for the year ended March 31, 20252026 increaseddecreased $4.5$0.7 million, or 82.3%,7.1%, as compared to the prior year. During the year ended March 31, 2026, dividend and success fee income consisted of $6.1 million of dividend income and $3.2 million of success fee income. During the year ended March 31, 2025, dividend and success fee income consisted of $6.8 million of success fee income and $3.3 million of dividend income. During the year ended March 31, 2024, dividend and success fee income consisted of $3.6 million of success fee income and $1.9 million of dividend income.

As of March 31, 20252026 and 2024,2025, SFEG Holdings, Inc. represented 10.8%19.8% and 10.1%10.8% of the total investment portfolio at fair value, respectively.

Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, increased $38.0$37.3 thousand,million, or 0.1%,56.8%, for the year ended March 31, 2025,2026, as compared to the prior year, primarily due to increases in incentive fees, interest expense, other expensesexpense and base management fee, partially offset by a decrease in incentiveother fees.expenses.

In accordance with GAAP, we recorded a capital gains-based incentive fee of $38.0 million during the year ended March 31, 2026, compared to a capital gains-based incentive fee of $7.4 million during the year ended March 31, 2025, compared to a capital gains-based incentive fee of $12.7 million during the year ended March 31, 2024.2025. The capital gains-based incentive fee is a result of the net impact of net realized gains (losses) and net unrealized appreciation (depreciation) on investments during the respective periods. The income-based incentive fee for the year ended March 31, 20252026 decreased $3.5$4.5 million, or 42.2%,93.6%, as compared to the prior year, due to the increase in net assets, which increases the pre-incentive fee net investment income required to meetdrives the hurdle rate, and thea decrease in pre-incentive fee net investment income.

Base management fee for the year ended March 31, 20252026 increased $1.6$3.7 million, or 9.2%,19.5%, as compared to the prior year, primarily due to the increase in the average total assets subject to the base management fee as a result of a net increase in additionalthe fair value of investments at cost and an increase in theadditional fairinvestments valueat of investments.cost.

(C)Reflected as a line item on our accompanying Consolidated StatementStatements of Operations.

Interest expense on borrowings increased $4.1$8.9 million, or 17.1%,31.5%, during the year ended March 31, 2025,2026, as compared to the prior year, primarily due to interest expense related to the issuance of the 7.785%7.875% 2030 Notes in December 20242024, the 6.875% 2028 Notes in November 2025 and the 7.125% 2031 Notes in February 2026 and increased borrowings on the Credit Facility, partially offset by a decrease in the effective interest rate and the redemption of the 8.00% 2028 Notes in MayDecember 2023 and the increase in the effective interest rate of the Credit Facility.2025. The weighted-average balance outstanding on our Credit Facility during the year ended March 31, 20252026 was $60.3$76.2 million, as compared to $61.0$60.3 million in the prior year. The effective interest rate on our Credit Facility, excluding the impact of deferred financing costs, during the year ended March 31, 20252026 was 10.6%,9.9%, as compared to 10.1%10.6% in the prior year. This increasedecrease in the effective interest rate on our Credit Facility was primarily a result of an increase in unused commitment fees, partially offset by a decrease in interest rates on the drawn portion of our Credit Facility.Facility, partially offset by an increase in unused commitment fees due to the increased facility size during the year.

Other expenses increaseddecreased $1.9$2.1 million, or 44.3%,33.6%, during the year ended March 31, 2025,2026, as compared to the prior year, primarily due to ana increasedecrease in bad debt expense.expense and tax expense, partially offset by an increase in professional fees.

During the year ended March 31, 2025,2026, we recorded net realized gainslosses on investments of $63.2$26.3 million, primarily due to athe $43.4realized millionloss from the restructuring of J.R. Hobbs, partially offset by the equity distribution recognized as realized gain from theOld exitWorld ofChristmas, Nth Degree and a $19.8 million realized gain from the exit of Nocturne.Inc.

During the year ended March 31, 2024,2025, we recorded net realized gains on investments of $30.3$63.2 million, primarily due to a $43.5$43.4 million realized gain from the exit of CounselNth Press,Degree Inc.Investment Group, LLC ("CounselNth PressDegree"), $1.2 million of realized gains related to certain prior period exits and $0.3a $19.8 million of realized gain from the recapitalizationexit of OldNocturne WorldLuxury Christmas.Villas, Inc. These amounts were partially offset by the $14.7 million realized loss recognized from the dissolution and liquidation of The Mountain Corporation ("The MountainNocturne").

Net Unrealized Appreciation (Depreciation) ofon Investments

Net unrealized depreciationappreciation ofon investments of $26.0$216.1 million for the year ended March 31, 20252026 was primarily due to the reversal of net unrealized appreciation of Nth Degree and Nocturne upon exit and decreasedincreased performance of certain of our portfolio companies. These decreases were partially offset bycompanies, an increase in transaction multiples used to estimate the fair value of certain of our portfolio companies and increasedthe reversal of previously recorded unrealized depreciation related to our investment in J.R. Hobbs upon its restructure. These increases were partially offset by decreased performance of certain of our portfolio companies.

Net unrealized appreciationdepreciation ofon investments of $33.3$26.0 million for the year ended March 31, 20242025 was primarily due to the net unrealized appreciation across our portfolio, as well as the reversal of unrealized depreciation of our investment in The Mountain upon its liquidation and dissolution. These amounts were partially offset by the reversal ofnet unrealized appreciation of ourNth investmentDegree inand Counsel PressNocturne upon exit.exit Theand net appreciation was driven primarily by increaseddecreased performance of certain of our portfolio companies,companies. These decreases were partially offset by decreasedan comparableincrease in transaction multiples used to estimate the fair value of certain of our portfolio companies and increased performance of certain of our portfolio companies.

Across our entire investment portfolio, we recorded $25.2$222.1 million of net unrealized appreciation on our equity investments and $6.0 million of net unrealized depreciation on our debt investments and $0.7 million of net unrealized depreciation on our equity investments for the year ended March 31, 2025.2026. As of March 31, 2025,2026, the fair value of our investment portfolio wasexceeded more than ourthe cost basis by $40.3$256.4 million, compared to March 31, 2024,2025, when the fair value of our investment portfolio wasexceeded more than ourthe cost basis by $66.2$40.3 million. This resulted in net unrealized depreciationappreciation of $25.9$216.1 million for the year ended March 31, 2025.2026. Our entire portfolio washad a fair valuedvalue atof 104.3%124.4% of cost as of March 31, 2025.2026.

Purchases of investments totaled $221.2 million during the year ended March 31, 2025, compared to $183.9 million during the year ended March 31, 2024. Net proceeds from the sale and recapitalization of investments and principal repayments of investments totaled $199.6 million during the year ended March 31, 2025, compared to $80.2 million during the year ended March 31, 2024.

As of March 31, 2026, we had equity investments in and/or loans to 29 companies with an aggregate cost basis of $1.1 billion. As of March 31, 2025, we had equity investments in and/or loans to 25 companies with an aggregate cost basis of $939.1 million. As of March 31, 2024, we had equity investments in and/or loans to 24 companies with an aggregate cost basis of $854.3 million. The following table summarizes our total portfolio investment activity for the years ended March 31, 20252026 and 20242025:

Net cash provided by financing activities for the year ended March 31, 20242026 was $69.9$88.8 million, which consisted primarily of $74.8 million of gross proceeds from the issuance of the 8.00% 2028 Notes, $43.9$96.9 million of proceeds from the issuance of commonour stock7.125% under2031 Notes, net of deferred offering costs, $58.8 million of proceeds from the 2022issuance Commonof Stockour ATM6.875% Program,2028 Notes, net of deferred offering costs, $41.6 million of proceeds from issuance of common stock, net of expenses and shelf offering registration costs, and $31.8$23.9 million of net borrowings on our Credit Facility, partially offset by $76.1the $74.8 million redemption of our 8.00% 2028 Notes, $57.2 million in distributions to common stockholdersstockholders, and $4.5$0.3 million of deferred financing and offering costs.

To qualify to be taxed as a RIC and thus avoid corporate level federal income tax on the income we distribute to our stockholders, we are required, among other requirements, to distribute to our stockholders on an annual basis at least 90% of our Investment Company Taxable Income, determined without regard to the dividends paid deduction. Additionally, our Credit Facility generally restricts the amount of distributions to stockholders that we can pay out to be no greater than the sum of certain amounts, including our net investment income, plus net capital gains, plus amounts elected by the Company to be considered as having been paid during the prior fiscal year in accordance with Section 855(a) of the Code. In accordance with these requirements, our Board of Directors declared, and we paid, monthly cash distributions of $0.08 per common share for each of the twelve months from April 20242025 through March 2025,2026, and a supplemental distribution of $0.70$0.54 per common share paid in OctoberJune 2024.2025. See also “Recent Developments - Distributions and Dividends” for a discussion of cash distributions to common stockholders declared by our Board of Directors in April 2025.2026.

For each of the fiscal years ended March 31, 20252026 and 2024,2025, Investment Company Taxable Income exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $36.7$21.3 million and $18.7$36.7 million, respectively, of the first distributions paid subsequent to fiscal year-end as having been paid in the prior year. In addition, for each of the fiscal yearsyear ended March 31, 20252026, our capital loss carryforward balance was $17.3 million and 2024,no distributions paid subsequent to fiscal year-end will be treated as having been paid in the prior year. For the fiscal year ended March 31, 2025, net capital gains exceeded distributions declared and paid, and, in accordance with Section 855(a) of the Code, we elected to treat $18.7 million and $1.4 million, respectively, of the first distributions paid subsequent to fiscal year-end as having been paid in the prior year. For the year ended March 31, 2026, we recorded $0.3 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which increased Total distributable earnings and decreased Capital in excess of par value. For the year ended March 31, 2025, we recorded $1.2 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which decreased Capital in excess of par value and increasedTotal Overdistributeddistributable net investment income. For the year ended March 31, 2024, we recorded $0.8 million of net adjustments for estimated permanent book-tax differences to reflect tax character, which increased Overdistributed net investment income and decreased Accumulated net realized gain in excess of distributions and Capital in excess of par value.earnings.

In May 2024, we entered into equity distribution agreements with Oppenheimer & Co., B. Riley Securities, Inc. and Virtu Americas LLC (collectively, the "Sales Agents"), under which we have the ability to issue and sell shares of our common stock, from time to time, through the Sales Agents, having an aggregate offering price of up to $75.0 million in ourthe 2024 Common Stock ATM Program. In June 2025, we entered into an equity distribution agreement with M&T Securities, Inc. and entered into amendments to the agreements with Oppenheimer & Co. Inc., B. Riley Securities, Inc. and Virtu Americas LLC to add M&T Securities, Inc. as a Sales Agent for the 2024 Common Stock ATM Program. As of March 31, 2025,2026, we had remaining capacity to sell up to an additional $73.0$30.8 million of common stock under the 2024 Common Stock ATM Program.

In August 2022, we entered into equity distribution agreements with Oppenheimer & Co. and Virtu Americas LLC (each a “2022 Sales Agent”), under which we had the ability to issue and sell shares of our common stock, from time to time, through the 2022 Sales Agents, up to an aggregate offering price of $50.0 million in ourthe 2022 Common Stock ATM Program. In August 2023, we entered into an equity distribution agreement with B. Riley Securities, Inc. and entered into amendments to the agreements with Oppenheimer & Co. Inc. and Virtu Americas LLC to add B. Riley Securities, Inc. as a 2022 Sales Agent for the 2022 Common Stock ATM Program. We did not sell any shares under the 2022 Common Stock ATM Program, which terminated in connection with our entry into the 2024 Common Stock ATM Program on May 14, 2024, during the year ended March 31, 2025.

During the year ended March 31, 2024,2026, we sold 3,097,1622,984,586 shares of our common stock under the 20222024 Common Stock ATM ProgramProgram, atwith a weighted-average gross price of $14.37$14.12 per share and raised approximately $44.5 million of gross proceeds. Thea weighted-average net price of $13.92 per share,share after deducting commissions and offering costs borne by us, wasraising $14.12approximately $42.1 million and resulted$41.5 inmillion totalof gross and net proceedsproceeds, of approximately $43.7 million.respectively. These sales were above our then current NAV per share.

All statements contained herein, other than historical facts, may constitute “forward-looking statements.” These statements may relate to, among other things, our future operating results, our business prospects and the prospects of our portfolio companies, actual and potential conflicts of interest with Gladstone Management Corporation (the “Adviser”), our investment adviser, and its affiliates, the use of borrowed money to finance our investments, the adequacy of our financing sources and working capital, and our ability to co-invest. In some cases, you can identify forward-looking statements by terminology such as “estimate,” “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,” “project,” “intend,” “expect,” “should,” “would,” “if,” “seek,” “possible,” “potential,” “likely” or the negative or variations of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Such factors include: (1) changes in the economy and the capital markets, including stock price volatility, inflation, elevatedchanging interest rates, geopolitical conflicts, tariffs and trade wars and risks of recession; (2) risks associated with negotiation and consummation of pending and future transactions; (3) the loss of one or more of our executive officers, in particular David GladstoneDullum, orErika DavidHighland Dullumand Christopher Lee; (4) changes in our investment objectives and strategy; (5) availability, terms (including the possibility of interest rate volatility) and deployment of capital; (6) changes in our industry, interest rates, exchange rates, or the general economy, including inflation; (7) our business prospects and the prospects of our portfolio companies; (8) the degree and nature of our competition; (9) changes in governmental regulation, tax rates and similar matters; (10) our ability to exit investments in a timely manner and/or at fair value; (11) our ability to maintain our qualification as a regulated investment company (“RIC”) and as a business development company (“BDC”); and (12) those factors described in Item 1A. “Risk Factors” herein and the “Risk Factors” sections of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025,2026, filed with the U.S. Securities and Exchange Commission (“SEC”) on May 13,12, 20252026 (the “Annual Report”). We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. Actual results could differ materially from those anticipated in our forward-looking statements and future results could differ materially from our historical performance. We have based forward-looking statements on information available to us on the date of this Quarterly Report on Form 10-Q (the “Quarterly Report”). Except as required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report. Although we undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise, you are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC, including subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. The forward-looking statements contained in this Quarterly Report are excluded from the safe harbor protection provided by the Private Securities Litigation Reform Act of 1995 and Section 27A of the Securities Act of 1933, as amended.

In this Quarterly Report, the terms the “Company,” “we,” “us,” and “our” refer to Gladstone Investment Corporation and its wholly-owned subsidiaries unless the context otherwise indicates. Dollar amounts,amounts in tables, except per share amounts, are in thousands, unless otherwise indicated.

We were established for the purpose of investing in debt and equity securities of established private businesses operating in the United States (“U.S.”). Our investment objectives are to: (i) achieve and grow current income by investing in debt securities of established businesses that we believe will provide stable earnings and cash flow to pay expenses, make principal and interest payments on our outstanding indebtedness, and make distributions to our stockholders that grow over time; and (ii) provide our stockholders with long-term capital appreciation in the value of our assets by investing in equity securities of established businesses, generally in combination with the aforementioned debt securities, that we believe can grow over time to permit us to sell our equity investments for capital gains. To achieve our objectives, our investment strategy is to invest in several categories of debt and equity securities, with individual investments generally totaling up to $75 million, although investment size may vary depending upon our total assets or available capital at the time of investment. We expect that our investment portfolio over time will consist of approximately 75.0%70% in debt investments and 25.0%30% in equity investments, at cost. As of DecemberJune 31,30, 2025,2026, our investment portfolio was comprised of 71.0%70.6% in debt investments and 29.0%29.4% in equity investments, at cost.

We focus on investing in lower middle market private businesses (which we generally define as private companies with annual earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $4$5 million to $15$25 million) (“Lower Middle Market”) in the U.S. that meet certain criteria, including: the sustainability of the business’ free cash flow and its ability to grow it over time, adequate assets for loan collateral, experienced management teams with a significant ownership interest in the portfolio company, reasonable capitalization of the portfolio company, including an ample equity contribution or cushion based on prevailing enterprise valuation multiples, and the potential to realize appreciation and gain liquidity in our equity position, if any. We anticipate that liquidity in our equity position will be achieved through a merger, acquisition or recapitalization of the portfolio company, a public offering of the portfolio company’s stock, or, to a lesser extent, by exercising our right to require the portfolio company to repurchase our warrants, as applicable, though there can be no assurance that we will always have these rights. We invest in portfolio companies that seek funds for management buyouts and/or growth capital to finance acquisitions, recapitalize or, to a lesser extent, refinance their existing debt facilities. We seek to avoid investing in high-risk, early-stage enterprises. Our targeted portfolio companies are generally considered too small for the larger capital marketplace.

We invest by ourselves or jointly with other funds and/or management of the portfolio company, depending on the opportunity. In July 2012, the SEC granted us an exemptive ordersorder (collectively, the “Co-Investment Order”) that expanded our ability to co-invest, under certain circumstances, with certain of our affiliates, including Gladstone Capital Corporation and Gladstone Alternative Income Fund ("Gladstone Alternative") and any future BDC or registered closed-end management investment company that is advised (or sub-advised if it controls the fund) by the Adviser, or any combination of the foregoing, subject to the conditions in the Co-Investment Order. In September 2025, the SEC granted us aour newcurrent Co-Investment Order that contains a more flexible requirement that allocations be “fair and equitable” to us and that the Adviser consider the interests of us in allocations and which minimizes certain board approval requirements from the prior Co-Investment Order. We believe the Co-Investment Order has enhanced and will continue to enhance our ability to further our investment objectives and strategies. If we are participating in an investment with one or more co-investors, whether or not an affiliate of ours, our investment is likely to be smaller than if we were investing alone.

Our shares of common stock, our 5.00% Notes due 2026 (“5.00% 2026 Notes”), our 4.875% Notes due 2028 ("4.875% 2028 Notes") and, our 7.875% Notes due 2030 (“7.875% 2030 Notes”) and our 7.125% Notes due 2031 ("7.125% 2031 Notes") are traded on the Nasdaq Global Select Market (“Nasdaq”) under the trading symbols “GAIN,” “GAINN,GAINZ,” “GAINZ,GAINI,” and “GAINI,”"GAING," respectively. Our 6.875% Notes due 2028 ("6.875% 2028 Notes") are not listed.

While the business environment remains competitive, we continue to see new investment opportunities consistent with our investment strategy of providing a combination of debt and equity in support of management and independent sponsor-led buyouts of Lower Middle Market companies in the U.S. During the nine months ended December 31, 2025, we invested in four new portfolio companies. From our initial public offering in June 2005 through DecemberJune 31,30, 2025,2026, we have invested in 66 companies, excluding investments in syndicated loans, for a total of approximately $2.2 billion, before giving effect to principal repayments and divestitures.

The majority of the debt securities in our portfolio have a success fee component, which enhances the yield on our debt investments. Unlike paid-in-kind (“PIK”) income, we generally do not recognize success fees as income until payment has been received. Due to the contingent nature of success fees, there are no guarantees that we will be able to collect any or all of these success fees or know the timing of any such collections. As a result, as of DecemberJune 31,30, 2025,2026, we had unrecognized, contractual success fees of $62.7$63.8 million, or $1.57$1.60 per common share. Consistent with accounting principles generally accepted in the U.S. (“GAAP”), we have not recognized success fee receivables and related income in our accompanying Consolidated Financial Statements until earned.

From inception through DecemberJune 31,30, 2025,2026, we exited our investments in 33 portfolio companies that we acquired under our buyout strategy. In the aggregate, these sales have generated $353.4$353.6 million in net realized gains and $45.4 million in other income upon exit, for a total increase to our net assets of $398.8$399.0 million. We believe, in aggregate, these transactions were equity-oriented investment successes and exemplify our investment strategy of striving to achieve returns through current income on the debt portion of our investments and capital gains from the equity portion. The 33 liquidity events have offset any realized losses since inception, which were primarily incurred during the 2008-2009 recession in connection with the sale of performing syndicated loans at a realized loss to pay off a former lender. The successful exits, in part, enabled us to increase the monthly distribution per common share by 100.0% from March 2011 through DecemberJune 31,30, 2025,2026, and allowed us to declare and pay 24 supplemental distributions to common stockholders through DecemberJune 31,30, 2025.2026.

We have been able to meet our capital needs through extensions of and increases to the Fifth Amended and Restated Credit Agreement dated April 30, 2013, as amended from time to time (the “Credit Facility”), and by accessing the capital markets in the form of public offerings of unsecured notes, as well as common and preferred stock. We have successfully extended the Credit Facility’s revolving period multiple times, most recently to OctoberJune 2026,2029, and currently have a total commitment amount of $300.0$405.0 million.million (with a potential total commitment of $500.0 million through additional commitments from new or existing lenders). During the nine monthsyear ended DecemberMarch 31, 2025,2026, we issued the 6.875% 2028 Notes for gross proceeds of $60.0 million, issued the 7.125% 2031 Notes for gross proceeds of $100.0 million and sold 2,984,586 shares of our common stock under our "at-the-market" program (the "2024 Common Stock ATM Program") for gross proceeds of approximately $42.1 million. During the year ended March 31, 2025, we issued the 7.875% 2030 Notes for gross proceeds of $126.5 million and sold 148,714 shares of our common stock under our 2024 Common Stock ATM Program for gross proceeds of approximately $2.0 million. Refer to “Liquidity and Capital Resources — Revolving Line of Credit” for further discussion of the Credit Facility and to “Liquidity and Capital Resources — Equity — Common Stock” for further discussion of our common stock.

Although we have been able to access the capital markets historically, market conditions may continue to affect the trading price of our common stock and thus our ability to finance new investments through the issuance of common equity. On DecemberJune 31,30, 2025,2026, the closing market price of our common stock was $13.97$15.46 per share, representing a 6.6%4.8% discount to our net asset value (“NAV”) of $14.95$16.24 per share as of DecemberJune 31,30, 2025.2026. When our common stock trades below NAV, our ability to issue additional equity is constrained by provisions of the 1940 Act, which generally prohibits the issuance and sale of our common stock at an issuance price below the then-current NAV per share without stockholder approval, other than through sales to our then-existing stockholders pursuant to a rights offering.

As of DecemberJune 31,30, 2025,2026, our asset coverage ratio on our senior securities representing indebtedness was 201.1%.208.8%.

During the ninethree months ended DecemberJune 31,30, 2025,2026, the following significant transactions occurred:

•In SeptemberJune 2025,2026, we entered into a new $20.0$3.0 million secured first lien term loan with J.R.Home HobbsConcepts Co.Acquisition, – Atlanta, LLC ("J.R. Hobbs"),Inc., restructuring our previously outstanding secured first lien term loans and line of creditloan with an aggregate totala cost basis of $49.9$12.0 million, which resulted in a realized loss of $29.9$9.0 million.

•In JanuaryJuly 2026, our Board of Directors declared the following monthly cash distributions to common stockholders:

Comparison of the Three Months Ended DecemberJune 31,30, 20252026 to the Three Months Ended DecemberJune 31,30, 20242025

Total investment income increased $3.7$4.8 million, or 17.3%,20.4%, for the three months ended DecemberJune 31,30, 2025,2026, as compared to the prior year period, primarily due to an increase in interest income and dividend and success fee income and interest income.

Interest income from our investments in debt securities increased $2.3$1.0 million, or 11.2%,4.7%, for the three months ended DecemberJune 31,30, 2025,2026, as compared to the prior year period. Generally, the level of interest income from investments is directly related to the weighted-average principal balance of our interest-bearing investment portfolio outstanding during the period, multiplied by the weighted-average yield.

The weighted-average principal balance of our interest-bearing investment portfolio during the three months ended June 30, 2026 was $705.5 million, compared to $610.0 million for the prior year period. The weighted-average yield on our interest-bearing investments, excluding cash and cash equivalents and receipts recorded as dividend and success fee income, was 12.9% for the three months ended DecemberJune 31,30, 2025,2026, compared to 14.0%14.1% for the prior year period. The weighted-average yield may vary from period to period, based on the current stated interest rate on interest-bearing investments, coupled with any collection of past due interest during the period. We had no collections of past due interest during the three months ended June 30, 2026. During the three months ended June 30, 2025, we collected $1.5 million in past due interest from SFEG Holdings, Inc. ("SFEG") that was previously on non-accrual status.

As of DecemberJune 31,30, 20252026 and March 31, 2025,2026, SFEG Holdings, Inc. ("SFEG") represented 11.8%17.3% and 10.8%19.8% of the total investment portfolio at fair value, respectively.

Dividend and success fee income for the three months ended DecemberJune 31,30, 20252026 increased $1.4$3.8 million, or 164.2%,199.6%, from the prior year period. During the three months ended DecemberJune 31,30, 2025,2026, dividend and success fee income consisted of $1.2$5.6 million of success fee income and $1.0$0.1 million of dividend income. During the three months ended DecemberJune 31,30, 2024,2025, dividend and success fee income consisted of $1.1 million of dividend income and $0.8 million of success fee income.

Total expenses, net of any non-contractual, unconditional, and irrevocable credits from the Adviser, increaseddecreased $11.4$2.0 million, or 56.2%,14.0%, during the three months ended DecemberJune 31,30, 2025,2026, as compared to the prior year period, primarily due to ana increasedecrease in incentive fees, interestpartially expenseoffset andby an increase in base management fees,fees and ainterest decrease in fee credits from the Adviser.expense.

In accordance with GAAP, during the three months ended DecemberJune 31,30, 2025,2026, we recorded a $14.7$5.6 million reversal of previously accrued capital gains-based incentive fee compared to a $7.5$0.2 million capital gains-based incentive feereversal during the three months ended DecemberJune 31,30, 2024.2025. The capital gains-based incentive fee is a result of the net impact of net realized gains (losses) and net unrealized appreciation (depreciation) on investments during the respective periods. The income-based incentive fee decreased by $1.9 million, for the three months ended December 31, 2025, as compared to the prior year period, primarily due to an increase in net assets, which drives the hurdle rate, and a decrease in pre-incentive fee net investment income.

(C)Reflected as a line item on our accompanying Consolidated Statements of Operations.

Interest expense on borrowings increased $3.1$1.4 million, or 48.7%,16.0%, during the three months ended DecemberJune 31,30, 2025,2026, as compared to the prior year period, primarily due to increased borrowings on our Credit Facility and the issuance of the 6.875% 2028 Notes in November 2025 and the 7.785%7.125% 20302031 Notes in DecemberFebruary 2024 and increased borrowings on our Credit Facility,2026, partially offset by the redemption of the 8.00% 2028 Notes in December 20252025, redemption of the 5.00% 2026 Notes in May 2026 and a decrease in the effective interest rate.rate on the Credit Facility. The weighted-average balance outstanding underon our Credit Facility during the three months ended DecemberJune 31,30, 20252026 was $80.2$116.7 million, compared to $41.9$36.3 million in the prior year period. The effective interest rate on our Credit Facility, excluding the impact of deferred financing costs, during the three months ended DecemberJune 31,30, 20252026 was 9.7%,8.2%, as compared to 11.8%14.0% in the prior year period. The decrease in the effective interest rate on the Credit Facility was primarily a result of lower interest rates on the drawn portion of our Credit Facility,Facility partiallyand offseta by an increasedecrease in unused commitment fees on the drawnundrawn portion of the Credit Facility during the three months ended DecemberJune 31,30, 2025.2026.

The realized gains (losses) and unrealized appreciation (depreciation) across our investments for the three months ended DecemberJune 31,30, 20252026 and 20242025 were as follows:

During the three months ended DecemberJune 31,30, 2025,2026, we recorded net realized gainslosses on investments of $3.5$9.0 million, due to the equity distribution recognized as realized gainloss from Oldthe Worldrestructuring Christmas,of Home Concepts Acquisition, Inc. ("Old World"). During the three months ended DecemberJune 31,30, 2024,2025, we did not record any net realized gains or losses on investments.